With rising unemployment when will coin market crash?

Not necessarily. Of course what do you mean by quality material?

 

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There's no flood of it, but with shops and shows closed more material is being put online by people that may not have sold online in the past. If anything though the best of the best is probably generally being held back right now

 

Markets are funny beasts. Just like all others, coins are hard to predict.

 

If one has money, there will be opportunity.

 

If the recession is significantly worse than 2008, good chance mid-priced coins will decline in value. It will take a while for folks who are getting government support checks, like covid-19 relief and unemployment, to exhaust that source of income and for them to exhaust their savings. This may be extended by additional funds provided by the US government. But even with the good standing of the US Treasury and Fed, there is a limit to how much they can borrow to distribute to the citizenry. Eventually, the unemployed will face the prospect of losing their houses, cars, etc.. They can postpone this for a while by selling non-essential tangible property like jewelry, bullion, second car, coins, etc.

By mid-priced coins, I mean ones that are valued significantly above melt value but are not in the mid-five-figure and up category. PM coins will have their melt floor, which might even go up for a while. The really expensive coins are bought by folks with lots of moolah, and most of them will be able to keep their collection and add to it. It's folks who have bought coins for a few hundred bucks to low five-figures that will be faced with losing their house or selling the collection. When that happens, increased supply will diminish price.

It's sad, but a lot of folks will have to decide whether to sell the collection, which they love and into which they have put so much work, or lose their house. Even sadder, they eventually may lose both.

Cal

 

With a 38% drop in real GDP estimated for Q2, this is much deeper than The Depression.

For coins $1,000-$10,000.....I think prices will decline but not crater since prices have been weak for years and NOT coming off a bubble peak.

I think that anybody who has ANY coins that cost low 5-figures has plenty of liquid assets to survive a few months.

I'd be more worried about folks with more modest means who have coins costing $50-$500.

Maybe, but I think most folks with financial problems will either NOT have coin collectionss

 

I believe, with proper research, and market coin knowledge, you can locate properly priced specimens. There certainly are numerous dregs, JMO, to view through.

I usually locate better than 1 "top tier" TPG certified Gold coin per week, ordered 2 yesterday, 1 "CACed", and also acquired 2 last week.

I'm finding that your collecting spectrum must be diverse to locate continuous quality candidates, which eliminates the majority of buyers who might search for only 1 type.

Another challenge is the weighting of equity value, when liquidating one discounted asset to acquire another type. Is it wise to take a 30%+ discount on stock to acquire a premium Gold coin, infrequently offered, and properly priced, with perceived greater long-term potential?

JMHO

 

I have noticed that as well in certain areas. It has taken me much more time to get a 1938 and 1938-S Washington Quarter in MS 66 without distracting toning. Perhaps it is just that coin, I do not know.

 

I agree folks that own a 5-figure coin will likely have enough liquid assets to last a few months. But the economic downturn will last a lot longer than a few months. Until the prevalence of covid-19 becomes very low, my wife and I will not go to a restaurant, theater, sporting event, exposition, bar, museum, etc. nor will we ride any form of public transportation nor stay in a hotel or motel. Mostly we go out for groceries, fuel (and use less of that these days), and to health providers. There are lots of others who will behave similarly. As many folks have said, the virus, not politicians or bureaucrats, will decide when the economy will re-open.

There are plenty of unemployed folks who had a 6-figure family income and don't have a lot of savings in the form of cash or equities. But they do have monthly obligations and needs like mortgage, car loan, student loan, food, utilities, etc. Not many of these people live in a double-wide and drive a 2000 Corolla. The cash and non-tax-deferred equities will go quickly. Tough decision on the tax-deferred assets. In some cases, it will be lose the house versus less income in retirement. However, some of these folks do have nice coin collections, including some 5-figure coins ... had to have a '89 to complete the CC Morgan set. Most will elect to sell the collection before they give up the house or tax-deferred assets. That's when increasing supply will depress prices. And I really hope I'm wrong.

Cal

 

With rising unemployment comes no disposable income. Coin purchases are basically a luxury item. Expect the market to dry up for average collectors. The 1% will always be in the market for “investment grade” collectibles. So, less money out there, and less demand equals a very soft market, until such time as the Coronavirus is under control, either by vaccine, or barrier drug. Figure on at least a 2 year decline and stagnation of the coin market.

 

If HA were smart -- or Ebay or Stacks or any online firm -- they'd survey their members as to how active they are....how much they have spent in the last year....how often they bid or check in on auctions...plus get a financial profile.

It would probably help them -- and the hobby -- out alot.

 

Great idea.

 

HA does survey at least part of the customer base on an annual basis. I've been asked to participate several times. To encourage compliance, they put the names of those who participate in a drawing for a coin. I vaguely recall the coin is an AGE ... of course, I didn't win it.

Cal

 

Also on this forum but another thread, a NGC-66 Morgan 1887-P, pedigreed to US Treasury holdings just sold at HA. NGC appearently mis-spelled "Treasury" to "TRESURY". Either that or the slab's a perfect counterfeit.

Add to this that both over here & in Europe corona is unabated, even tho the Economy's reopening. Mortality %'s are highest for old people: exactly that population which collects old coins. Thus there could be an increase in items disposed of by heirs of those collections: completely unrelated to the economy.

I have an artifact on my want list that sends me an email whenever wanted listed common US gold coins of certain types appear for auction. Usually these are just for joke value: the pieces are so bad that I always wonder "who would buy that stuff?" However, the latest one: a 1926 ms64+ Indian $10 actually looked not horribly overgraded. I forget if it had a CAC sticker or not. Probably it'll go for the top of the pricing range and also my job [engineering] is really cutting back on hours these days: so maybe not... Also it seems my 1909-O 10$ Indian may not be an Omega counterfeit after all. The 1926 is a marginally different type but if the economy goes back I may switch for $10's to $5's anyway.

 

I suspect that few "high volume/dollar" buyers would respond to HA request for info, but I've determined, it doesn't matter.

I've postal delivery in multiple states, after again having problems with HA bait/switch tactics, and cancelled any contact with them. I'm still receiving their requests to consign and brochures everywhere I receive communications. They're clever and tenacious at acquiring personal data of desired customers.

 

Actually this is a subject of interest to me. Exactly the numismatic knowledge as well as the background of people in the collecting cimmunity who buy there higher dollar coins. I don't care about their names but I am interested in the nature of this population.

 

I don't mean this in a snarky way, but where have you been for the last 12 years? The U.S. coin market has been in free fall with only brief pauses for the last 12 years.

 

And yes, I think it will finish killing off the lower end of the market. The rich that can afford coins aren't going to be buying a lot of coins below the $5k-$10k range and maybe higher. If unemployment holds steady at double digit numbers, the market will crumble as people exhaust their savings. Corporate bankruptcies are already up and consumer bankruptcies are expected to increase as well. The effects may be slowed by stimulus money, but that isn't going to last forever.

Edited: My comments are limited to numismatic coins and not necessarily bullion. Bullion may increase because of speculators, but that is certainly far from a given.

 

I wouldn't call it a free fall....I'd call it more "letting the air out of a mini-bubble."

It's nothing like the 1980-82 or 1990-1992 crashes.

Most prices are down 15-30% in the last few years. Not sure if going back 12 years makes sense, bullion AND numismatic values have had some rallies since.